US-Indonesia deal threatens China’s ‘entrenched position’ in nickel market: analysts

South China Morning Post · Feb 24, 2026 · Collected from RSS

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China will accelerate investment in alternative nickel supply sources and strengthen its role across the metal’s wider supply chain, analysts said, after the United States finalised a deal with Indonesia on Thursday that will give America unrestricted access to the country’s industrial commodities.While the US Supreme Court’s tariff ruling last week could add some uncertainty to US-Indonesia trade, the agreement has the potential to reshape the global supply chain for nickel – a metal used to make stainless steel and some electric vehicle batteries.“[The US-Indonesia deal] is quite important and China will not like it,” said Alicia Garcia-Herrero, chief economist for the Asia-Pacific region at Natixis. “China does have leverage through its big stake in Indonesian nickel mines and could try to retaliate by slowing tech transfers or pulling back investment.”Indonesia has emerged as a decisive player in the nickel market in recent years, accounting for more than 60 per cent of global mine supply for the metal, according to a Goldman Sachs article published last week.Chinese investment has supported Indonesia’s expansion in nickel processing capacity, reinforcing the nation’s growing influence on the market, the article added.The recent rally in global nickel prices – which saw the price of the base metal jump more than 30 per cent between mid-December and January – was largely driven by Indonesia’s decision to restrict how much ore could be mined, Goldman Sachs said.“Now Indonesia’s supply decisions are the lever the market is watching,” said Lavinia Forcellese, a commodities analyst with Goldman Sachs Research. “And relatively small changes in policy or approvals can have an outsize impact on global balances and prices.”